SEC's antibribery rule moves backward on transparency

A killer fallacy of regulation is the assumption that if some is good more must be better.

Acting on the difference, the US oil and gas industry finds itself in the villain’s role as it fights an overreaching Securities and Exchange Commission antibribery rule.

The SEC has required US companies to disclose payments to foreign governments project by project.

In a lawsuit, American Petroleum Institute, Independent Petroleum Association of America, and other business groups argue that payments should be reported as country totals.

At issue is the difference between aggregated and project-specific totals. The groups support disclosure of payments, as they should. But they say disclosing payments at the project level reveals competitively sensitive investment parameters. Doing so hurts companies in competition with companies not encumbered by the requirement, especially nationally owned enterprises already benefiting from the financial and diplomatic support of home-country governments.

The industry arguments are sound, the industry position proper. But the core issue gets swamped by incorrect claims that the industry opposes disclosure in general.

Ian Gary, senior policy manager of the antipoverty group Oxfam America, is reported to have accused the oil industry of “fighting to keep investors and communities in the dark.”

That’s simply wrong. The industry supports the Extractive Industries Transparency Initiative, under which reported payments can be aggregated. No such support would come from an industry trying to keep anyone in the dark.

Steam-rolling of the distinction between project and country disclosures is unfortunate. Payments to governments should be disclosed in service to transparency, improvement of which must be a priority goal of the oil and gas industry. Transparency is an essential antidote to corruption. It’s therefore essential to the legitimacy of expatriate work by the oil and gas industry. Aggregate disclosure, contrary to what supporters of the SEC overreach say, would improve it greatly.

To argue otherwise is to assert that transparency improves when companies that must disclose nothing gain advantage in competition for work opportunities. That’s backwards.